It can flood domestic Spanish and Italian banks with liquidity or cheap loans.
For these reasons banks should be encouraged to consider more seriously the liquidity of their loans as well as their default risk.
There would be an even more pressing concern for them, which would be the banks' access to emergency liquidity and emergency loans when commercial sources of money dry up.
The liquidity demands of the loans made it risky to invest in entrepreneurial ventures.
The ECB should go back to focusing on managing inflation after its recent moves to provide cheap loans to boost liquidity in the banking sector.
It may mean that it averted disaster even if only a portion of the new bank liquidity is used to expand loans or purchase sovereign debt.
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One option is to use excess assets to increase liquidity, by internally securitising loans made in one country and moving them to another to back liabilities there.
Banks, forced to contemplate redeeming hundreds of billions of dollars in maturing commercial loans, began hoarding liquidity.
The idea is to give banks more liquidity so they can make auto loans and student loans and issue credit cards.
There is a risk that, in a period of market disruption when ETF investors want their money back, managers would be forced to recall such loans, adding to liquidity pressures.
The next step in the right direction for CIT may do with a written agreement it has with the New York Federal Reserve about its risk control measurements, loans and leases, capital, liquidity, dividend distribution and much more.
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High-yield short duration bonds and senior bank loans (also known as leveraged loans) are both attractive for excess liquidity in the current low-yield environment.
Banks must already adhere to stricter underwriting standards for credit cards and mortgage loans and will soon face higher capital and liquidity requirements.
The consumer asset backed securities market is a source of liquidity to financial institutions that provide federally guaranteed small business loans and consumer lending such as auto loans, student loans and credit cards.
Recent reviews have considered topics such as leveraged loans, enterprise-wide risk management, and liquidity practices.
Although the details are yet to be settled, the loans are expected to be used to set up a fund to cushion a dollarised Ecuador against economic shocks from abroad, to give subsidised loans to get businesses going again, to inject liquidity into a broken banking system, and to pay for schemes aimed at helping the poor.
Under the Basel III rules, banks have to restructure their balance sheets to meet new liquidity and risk-weighted asset ratios, and small-business loans can often fall under the riskier categories.
Instead, from August 9th, liquidity has dried up across all wholesale markets, making no distinction between loans of different quality, for much longer than even the most extreme forecast.
In America and Germany, where many subprime loans have ended up on banks' balance sheets, the liquidity crisis has been managed smoothly, whereas in Britain, with low arrears, a bank with a high-quality loan book nonetheless found itself in a situation where its retail depositors temporarily felt threatened.
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They priced portfolios of mortgage-backed bonds, corporate loans and securities backed by commercial real estate, and provided more liquidity to debt markets.
Those loans largely eliminated the risk that a bank would abruptly collapse due to liquidity problems.
Multinationals are downsizing and reworking their operations, and many local firms are facing serious liquidity problems due to high interest rates and the reluctance of banks to hand out loans.
While equity stock offerings were used frequently to build their businesses, the BDCs still had large amounts of debt secured by loans and equity investments in the very companies that are most susceptible to liquidity constraints during recessions.
Recently, the BIS has been helping central banks with short-term liquidity problems, aiding institutions in Latin America, Eastern Europe and Asia with crucial bridging loans.
In December, the European Central Bank finally succumbed to pressure and launched a program providing substantial additional liquidity to European banks by making unlimited, low interest-rate, three-year loans available to banks.
So banks' non-performing loans rise inexorably and governments take over more financial institutions, using up even more liquidity to keep them alive.
Because of both an abundance of liquidity (money to lend) and the rapid development of new mortgage methods and mechanisms, loans were made promiscuously to a generation of buyers.
That has given a big boost to domestic spending but raised concerns that the flood of liquidity will push up inflation, fuel bubbles in shares and housing, and store up bad loans.
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Governments are fighting to save their economies from a liquidity trap in which individual banks choose, rationally, to shore up their capital by withdrawing loans from healthy firms and households, but collectively tip the economy into depression.
That reality last week triggered a run by dollar depositors on European banks with exposure to government debt prompting the U.S. Federal Reserve to make emergency loans to the European Central bank so it, in turn, could provide dollar liquidity to its member banks.
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